In Some Ways, the Swamp Has Already Been Drained

As a candidate for the presidency, Donald Trump famously pledged to “drain the swamp” by, among other things, reducing the size of the federal government. This would be accomplished in part by workforce attrition and in part by relocating federal employees from the nation’s capital. It’s the latter that we want to focus on because there have been discussions since Trump’s inauguration, both in the White House and in Congress, about dispersing federal employees from Washington, D.C. to locations around the country.

Greater Washington, D.C., is home to half of the 10 wealthiest counties in the nation, thanks largely to the spending and steady employment provided by the federal government, and to the ancillary and allied jobs that government stimulates in the private sector. To spread the wealth elsewhere, several bills have been introduced in Congress to require federal agencies to move their headquarters. The Strategic Withdrawal of Agencies from Meaningful Placement (SWAMP) Act is the most recent. Introduced in late January by Rep. Luke Messer (R-IN), the SWAMP Act would encourage states and municipalities to compete for the relocation of federal agencies — especially meaningful to federal property investors — and prohibit federal agencies from entering into new construction, major renovations or lease agreements relating to existing headquarters within the Washington metropolitan area.

The SWAMP Act has not progressed beyond consideration in committee, and observers give it only a small chance of passing. Notably, many existing laws require federal agencies to maintain their headquarters in Washington. Still, SWAMP follows on the heels of other recent efforts to relocate federal agencies. Last year, as examples, Rep. Warren Davidson (R-OH) introduced the Drain the Swamp Act, and Rep. Jason Chaffetz introduced a House resolution entitled “Divest DC.” Both measures sought to force federal agencies to relocate outside the Washington, D.C. area, though neither cleared committee.

Executive branch efforts with similar goals may prove more successful. The Trump administration has proposed that Obama-era plans for a new FBI headquarters be restructured so that about 20%of its employees will be relocated far from the District — to Alabama, West Virginia and Idaho. Similarly, Interior Secretary Ryan Zinke has proposed relocating three large agencies under his purview — the Bureau of Land Management, the Bureau of Reclamation and the Fish and Wildlife Service — to Western sites closer to many assets and projects those agencies oversee. Further, the Office of Management and Budget’s government reorganization plan, published last week, includes a section entitled “Relocation Analytics,” which directs agencies to consider opportunities to relocate staff and offices to locations outside of the Washington, D.C. region.

If a government “of the people, by the people, for the people” should also be located among the people, then it’s hard to argue with the logic of dispersing federal employment to locations outside of metro D.C. It is important to recognize that roughly 85% of federal civilian employees are already located outside of the nation’s capital, albeit no other location has nearly so great a number of federal workers. Another argument is that it would cost less to provide federal offices elsewhere. On the whole, this is probably true, though the Washington, D.C. area has been suffering through a soft office market, making for some surprisingly tenant-friendly leases.

In any case, if we were to measure draining the swamp solely by the reduction in federal occupied real property, then there has already been a lot of success. Since the end of 2012, space occupied by federal agencies under GSA’s purview has decreased by slightly more than five million square feet. About two-thirds of the net reduction has occurred in the D.C. region.

At least from a real estate perspective, federal government downsizing in and around the nation’s capital has been enabled precisely because it is home to such a high concentration of agencies. The government has ample opportunity to consolidate and downsize offices without the need for transferring employees more than a few miles, or a few Metro stops.

These downsizing efforts date back years, arguably to the last BRAC in 2005 under George W. Bush. It affected 123,000 Department of Defense employees; and many of those jobs were eventually moved outside of the Washington, D.C. area between 2011 and 2013, causing numerous leases to go dark. Following that, stimulus funding, designed to spur recovery after the 2008 financial crisis, was used for renovations to federal buildings, which catalyzed relocation of several hundred thousand square feet of leased space into the owned inventory. Later, increased government spending during the recovery rallied Tea Party conservatives who swept in to the House in 2010, forcing downsizing through their prospectus approval authority. And finally, in cooperation with austerity-minded congressional appropriators, the Obama administration established policies to freeze and ultimately reduce the footprint. The fact is that downsizing is a process that dates back years before Trump arrived in office.

Footprint reduction in the nation’s capital is well underway, but Trump wants to accelerate the trend and take it further than his predecessors. So, should we expect some great federal diaspora? Maybe not. The fiscal reality is that relocations are expensive and disruptive, at least in the near term.

Politically, it will be tough sledding as well. Opponents of Trump’s swamp-draining initiatives are well represented in the Washington, D.C. area. The District of Columbia and its bordering congressional districts are under the aegis of a unified contingent of Democrats. These include Senators Mark Warner (D-VA) and Ben Cardin (D-MD) who wield substantial political heft from their posts as ranking members of influential committees and subcommittees. Further, the other metro area senators and all but one representative are Democrats (and that lone House Republican is facing a difficult re-election in November).

Calls to shrink the federal footprint on its home turf are not likely to dissipate — not least because politicians from far-flung states cannot resist the possibility of siphoning some of the capital’s wealth toward their own constituencies. The Trump administration is also working hard on a government transformation plan that could further disperse and downsize, but that plan will rely on substantial support and funding from Congress. Therefore, the outcome of the November elections may substantially determine the President’s ultimate success in draining the swamp.

Yet, government landlords will tell you that, from their perspective, the “swamp” has been draining for years.

Kurt Stout is the national leader of Colliers International’s Government Solutions practice group, which provides government real estate services to private investors and federal agencies. He also writes about federal real estate on his Capitol Markets team blog. You can contact Kurt by email.